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Oyo Ratings: Oyo IPO can deliver returns of up to 770% for early investors

New Delhi: While Oyo waits for Sebi’s nod to launch its IPO, early investors in the company are likely to see promising returns once the company goes public.

Given the company’s last implied valuation of $ 9.6 billion at the time Microsoft invested in September this year, the total number of shares according to the DRHP numbers is estimated at around 6.4 billion and the average cost per share in the draft Red Hering Prospectus (DRHP), companies like SVF India Holdings (Cayman) Limited by SoftBank, A1 Holdings Inc, China Lodging Holdings (HK) Limited and Global Ivy Ventures LLP are expected to increase their returns by 213%, 72%, 770% and 515%, respectively.

Oyo intends to raise Rs.8.430 billion through primary spending.

Oyo’s early investors like Lightspeed Ventures and Sequoia, as well as recent investors like Airbnb, Microsoft, Hindustan Media Ventures and founder Ritesh Agarwal will not sell any shares. Softbank, one of the largest shareholders, will sell about 2% of its existing stake through the IPO.

According to the company’s DRHP, the average cost per share for SoftBanks SVF India Holdings is Rs 34.81, while for A1 Holdings Inc, China Lodging Holdings and Global Ivy Ventures the average cost per share is Rs 63.52 and 17, respectively. 73 Rs.

SVF India Holdings holds 2,965,840,000 shares on a fully diluted basis while A1 Holdings holds 115,240,000 shares. China Lodging Holdings and Global Ivy Ventures hold 51,640,000 shares and 59,640,000 shares, respectively.

According to its DRHP, Oyo intends to use the proceeds from the IPO to prepay or repay certain loans from its subsidiaries, fund organic and inorganic growth opportunities, and for general corporate purposes. Its euphoric valuations are leading to promising p -er gains for investors for now, but sustainability has yet to be determined.

In a tweet on Wednesday, Oyo’s founder, Ritesh Agarwal, thanked @PMOIndia for organizing the idea sharing session with representatives from India Inc. “It was stimulating to hear PM’s vision of a podium for India. I really believe Indian startups will lead in this endeavor, as they demonstrated this year. When the government launched Startup India in 2016, India had 11 unicorns. Now with 79 unicorns of which 42 have just emerged this year, we have a real chance for startups to lead the next wave of economic growth for our country, “he wrote on Twitter.

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Oyo struggled with some hiccups after filing his DRHP. Following Oyo’s DRHP, Zostel had sent a letter to the market regulator demanding that Oyo’s draft prospectus be rejected and the IPO suspended. Zostel had said that Oyo’s IPO was “not maintainable” as the company’s c -ital structure was not “final”. Oyo had hit Zostel back with a letter and informed Sebi about it.

In his letter to Zostel, which was also addressed to Sebi, Oyo had written that neither the arbitration ruling of the Supreme Court nor the Delhi High Court had imposed a change in its shareholding structure. “In addition, despite a prayer from Zostel, the Delhi Supreme Court did not grant a suspension of the proposed offer,” Oyo wrote.

The industry association Federation of Hotel & Restaurant Associations of India (FHRAI) also reached out to Sebi last week, claiming they had not disclosed the investigation by the Directorate-General for GST Investigations. An Oyo spokesman firmly denied these allegations. “There is no tax evasion by the company. To date there have been no tax claims against the company. We have promoted better tax compliance for our hotel partners. Every hotel that is accepted into Oyo must follow formal processes, comply with p -erwork and comply with regulatory Requirements, “said an Oyo spokesman.

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